Helpful, but… When subsidized finance actually works

The Osservatorio Finanza Agevolata explores subsidized finance as a form of business support in today’s institutional and regulatory framework. While the theoretical benefits of these tools are well-known, their actual implementation is far less clear, due in part to the lack of a structured dataset providing a comprehensive view of the phenomenon.

This first edition of the Observatory set out to understand why companies use subsidized finance, the obstacles they face, the impact of the funding they receive, and the necessary conditions for those funds to have a positive effect.

The Osservatorio Finanza Agevolata conducted an in-depth analysis of 2,523 calls for proposals published between 2021 and 2023. The quantitative part of the study focused mainly on 2022 and 2023, deliberately excluding 2021 to avoid distortions caused by extraordinary pandemic-related measures. Several large European calls were also omitted to prevent them from skewing the overall picture. To complement this analysis, a number of company case studies were included.

The following dimensions were considered:

• Geographical scope: local (regional) vs. national calls
• Target companies: classified by size (micro, small, medium, and large enterprises)
• Type of incentive: non-repayable grants, subsidized loans, tax credits, guarantees, interest rate reductions, and hybrid instruments
• Purpose: distinction between emergency measures and ordinary (structural) ones, as well as the goals of the call

Even in the years following the Covid crisis, half of the calls for proposals were still emergency-driven, suggesting a shift from growth support tools to a kind of "insurance policy" against escalating uncertainty. Among the structurally-oriented measures, instead, sustainability and digital transformation/innovation stood out as the primary goals.

Local (regional) calls are numerous and often reserved for SMEs, but they involve very limited funding; this means that of the total resources on the table, there is only a small share that large enterprises can’t access. Specifically, in the sample, nearly 80% of the total number of calls were regional, but they represented only 7%–8% of total funding. Big businesses were eligible for only half of all calls, but this half accounted for 90% of the total value.

Smaller companies face the biggest barriers to accessing funds, such as excessive red tape and extremely tight timelines, from when the results of the call are published and the deadline for making the relative investments. Although detailed reporting requirements serve as a necessary safeguard, they aren’t manageable for everyone. In addition, the rush to invest can lead to suboptimal decisions.

Searching for suitable calls can be especially demanding for smaller companies. What’s more, for funding to deliver meaningful economic and financial benefits, one basic condition must be met: the goals of the call must align with the company’s investment strategy. If an entrepreneur knows what they want and searches for the right call that fits their needs, the impact can be substantial. But if the search for funding becomes an end in itself, the benefits will likely be marginal at best.

The study also highlights an excessive fragmentation of funding opportunities, with too many small, low-value calls. A more focused approach could ease the burden on public administrations and yield more consequential systemic outcomes.

A second edition of the Osservatorio Finanza Agevolata is in the works. It will be presented at SDA Bocconi School of Management on 10 June, 2025.